Thursday, April 16, 2009



By : Mr. Paul J. MacGrabbin, Jr., Chairman and Chief Advocate, Americans for Free & Fair Financial Services, Inc., a For-Profit Advocacy Group Specializing in Lending Issues from the Banker’s Perspective

Credit cards make Americans’ lives easier. They allow people to pay bills when cash runs short. They allow people to buy that special gift for a loved one when there is not quite enough money in the bank to cover the cost. In a word, they allow Americans to make essential purchases responsibly, from education to health care and beyond. Credit cards build upon trust. We trust Americans to be responsible and to pay us back—fair and square. We trust the American people. We believe that Americans are responsible people who deserve respect. Trust is good. Credit cards help Americans keep money moving through the economy. And when money moves freely through the economy, everyone wins.

Credit cards make money available to everyone. Our economy falters when people do not make credit purchases. Stocks plunge when Americans live within their means. Yet not every bank is willing to loan money to every American. We here at Americans for Free & Fair Financial Services, however, believe in the American people. We believe in one important word: Freedom. We believe there is value in credit purchases, and we believe that Americans should be free to buy what they want. In that spirit, we believe that every American should have a credit card to buy things when and where they want them, provided they can make minimum monthly payments subject to the maximum applicable interest rate under State or Federal law. Unlike banks, we trust in the American people’s ability to make payments. If you have a monthly income stream, we will give you credit—guaranteed. We do not need to see assets. We do not need to see real estate ownership. All we need to see is an income and some payment history. If you have an income, you can buy that television today. You can buy those sandals today. You can buy those sunglasses today. And you can finally pay that overdue child support installment today. Isn’t it time to stop letting bank balances rule your life? Worry about the bill later. Enjoy your life. We trust you. Just remember the magic letters:
J-C-I: Just Charge It™.

Credit cards help Americans get what they want. They embody the spirit of independence and freedom that makes America great. Despite this, there are individuals out there who do not trust the American people. They say that “unscrupulous” credit card companies prey on innocent Americans, enticing them to “get into debt over their heads.” They say that credit cards lure Americans into making bad financial decisions, ruining their financial lives. They say that our companies draft unfair contracts and charge unconscionable interest rates, then harass debtors with vicious telephone calls and legal action if they default. Put simply, these party poopers say that credit card companies exploit Americans’ naïveté, gullibility and hunger for quick material gain. And they call on government to “regulate” credit card companies to protect “innocent Americans” from credit card “scammers.”

We reject these criticisms. We are not scammers. We are bankers. We believe in the American people to make wise, informed and prudent financial decisions. We reject the contention that Americans are stupid, naïve or gullible. On the contrary, we believe that Americans make financial decisions only after due and reasonable deliberation. Americans do not use credit cards unless they fully read our rules and disclosures. Nor do they use credit cards unless they know they have the financial resources to pay their bills when they are due. Americans do not charge purchases if they know they do not have the money to pay for the items. Americans are responsible. They are grown-ups. They know what they are doing. They need freedom, not regulation. When government starts telling adult Americans how to spend their money, what’s next? Telling them what color socks to wear? When they should wash their underwear or use the toilet? If we allow government to intrude on freedom, there is no endpoint. Once government intrudes on one freedom, all freedom is worthless. We refuse to allow government to wage war on freedom. We believe in liberty. We trust in the American people; we do not believe they are stupid, naïve or gullible. Nor do we believe they are so weak that they require “special protection” from credit card companies. Far from it: We believe Americans should have more access to credit cards, not less. After all, Americans should have the freedom to make whatever economic decisions they wish without interference. That is American freedom.

Government is hostile to freedom. In recent years, government has forced us to make disclosures to the American people about our financial products. We have to tell them about the interest rate, the default rules, the assignment process and our collection practices. We have to tell them which banks participate in our funding pool, and which State’s law governs disputes. They even tell us that we must print these “facts” and make them “conspicuous,” so that even the dumbest customer could understand what we say. We find these regulations oppressive. We believe that two private parties should be free to bargain however they wish; we find it oppressive that the government forces us to tell our customers certain things that might turn them away or give them the wrong impression about our products. Freedom means saying what you want and selling what you want. These government regulations take our freedom away. And when our freedom suffers, so does the American people’s. When banks lend with fear, everyone loses. When banks are not free to bargain on terms they deem fit, costs increase for everyone. This is the price of government meddling in private contracts. In short, we believe in deregulation because we believe in freedom.

We generally reject government meddling in credit card affairs. Nonetheless, we call upon government to take action against dangerous private actors who undermine freedom and damage contract rights. In recent years, certain private businesses have sought to make a profit on debts owed to us. These so-called “credit card debt consolidators” offer to assume credit card debt from us at a reduced rate, then charge a higher rate to the debtor for a profit. These merciless profiteers seek to capitalize on the idea that credit companies tyrannize hard-working Americans and exploit their stupidity. At the same time, they blackmail us into thinking that our outstanding accounts are worth less than their face value, sell us short, then reserve the profits for themselves. Meanwhile, these ruthless bottom feeders advertise endlessly in print and on the airwaves, telling Americans that they “can overcome credit card debt” and “restore freedom to their lives.”

We find these developments perverse and abominable. For one, we resent the implication that “credit card companies” tyrannize Americans. The opposite is true: We believe in freedom, fairness and economic choice, not compulsion and tyranny. We also resent the assertion that these so-called “consolidators” represent “freedom” against us, the “big, bad credit card companies.” If anyone represents freedom, we do. We stand for free economic choice and unfettered credit opportunities. It is perverse for these Johnny-come-latelys to claim that they stand for freedom, when in fact we have defended freedom since day one. Third, consolidators wage a deliberate war on our contract rights. When we lend money to consumers, we have a right to receive repayment plus interest. It is in the rules. It is perfectly legal. Our consumers read the rules and respect the law; they knew what they signed. To that extent, we have a legally enforceable claim against our consumers for every dollar we lent to them, plus all accrued interest, penalties, fees, costs and collection expenses pursuant to applicable contract provisions under the State law of our choice. Now, consolidators come along and try to buy out our rights for a fraction of their value. What good is freedom if we cannot reap all the legal rewards from our hard work? If a consumer owes us $45,612.19 for purchases made (and accrued interest thereon) between 2005 and 2008, we want that amount, not something less. Yet if payment proves difficult to collect, these consolidators step in and offer us $10,000 for the account and all the rights. We resent this pressure. We want more money, not less. If we sell, we get the $10,000, but the rapacious consolidators run off with our legal right to demand $45,612.19 from the consumer. We would rather have our rights than a measly $10,000. And we believe in the law. Contract rights are sacred. We resent any attempt to steal what we earned through hard work and toil.

Credit card consolidators are dishonorable, profit-hungry thieves. They promise “relief” to “downtrodden consumers” from “vicious credit card companies.” In fact, they are avaricious charlatans who want to pilfer our investments. We created these accounts, not them. Just because we occasionally have some trouble strongarming payments from a few bad apples does not mean we should just roll over and surrender our rights to these carrion-crows. Put simply, we chased the quarry and killed the game; now we want the meat. We will not just fork it over to a bunch of cash-crazed vultures circling overhead. In this country, we reward hard work. Yet consolidators make a living stealing what belongs to others under the pretense of “contract assignment.” We find this contrary to freedom and contrary to everything America stands for. We call on Congress to take action against these nefarious bandits. No longer will we tolerate theft and plunder. No longer will we tolerate slanderous attacks against our good names. Banks provide freedom to millions. We do not unfairly exploit “weak Americans.” To the contrary, we believe in the American people with all our hearts. We believe in freedom for all. And we stand opposed to any effort to label our business “tyrannical.” There is nothing tyrannical about two sane adults bargaining out a fair credit arrangement, no matter what the interest rate may be. Sane adults freely and fairly agree to contract terms. That is all that matters, because that is real freedom.

Take a stand against credit card debt consolidators. They assume that you are weak, gullible and naïve. They say they want to help you, when in fact they merely want to plunder our bounty and make a dollar on your back. In so doing, they raise the costs for everyone, making it more and more difficult for everyday people like you to get credit. You want to buy that new computer, don’t you? Well, unless you tell your Congressman to put an end to the consolidators’ reign of terror against private contract rights, we will not be able to help you. In that sense, it is in your interest to help credit card companies. When you make it easier for us to lend to you, you make it easier to get the things you want, even if you do not have quite enough in the bank to buy them on your own. And you want the computer now, don’t you?

What are you waiting for? Get on the phone right away. Let’s make government work for us. Put consolidators out of business once and for all—and let’s make freedom mean something again.

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